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Contacts:
Jeanne Metzger, NVCA, 703-524-2549 x116, jmetzger@nvca.org
Starr Million, Porter Novelli for PricewaterhouseCoopers, 512-241-2237, starr.million@porternovelli.com
Jesse Reyes, Venture Economics, 973-645-9734, jesse.reyes@tfn.com
EMBARGOED UNTIL 12:01 AM EST, MARCH 24, 2003
LIFE SCIENCES REGAIN PROMINENCE
IN VENTURE CAPITAL ARENA
--Investing and Company Valuations Withstand Tough Economy--
Washington, D.C., March 24, 2003 – Venture capital investments in Biotechnology and
Medical Device companies combined to total $4.7 billion in 2002, or 22% of all
investing, the highest proportion in seven years, according to the MoneyTree Survey
from PricewaterhouseCoopers, Thomson Venture Economics, and the National Venture
Capital Association.
Over the past five years, investing in the Life Sciences has continued at a comparatively
steady pace relative to the venture capital market as a whole. The sector only partially
benefited from the huge surge in venture capital investing that began in 1998, but it also
did not suffer the steep declines of some technology industries as venture capital fell back
to more normal levels by 2002. Compared to 1998’s figure of $2.7 billion, investing in
Life Sciences in 2002 was up 70%. Investing in all other industries combined decreased
12% to $16.5 billion during the same period.
Tracy Lefteroff, global managing partner of the venture capital practice at
PricewaterhouseCoopers, observed: “The Life Sciences are not impervious to business
cycles, but they have a different set of drivers than some of the high tech categories.
Besides our aging population, FDA approval of new products continues at an
encouraging pace. And, the promise of greater clarification on reimbursement policies
from the Centers for Medicare and Medicaid Services bodes especially well for the
Medical Devices category.”
“Venture capital has played a vital role in the development of the Biotechnology and
Medical Device industries for decades. Life Sciences companies require patient capital
and venture capital firms are one of the few sources of financing that have both a long
time horizon and a high risk tolerance. Venture capitalists who invest in the Life Sciences
have specialized backgrounds and a long-term commitment to building great companies

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that will improve our standard of living,” explained Mark Heesen, president of the
National Venture Capital Association.
Steady Increases in Company Valuations
Bucking the post-boom trend, valuations of Life Sciences companies have been steadily
climbing over the last five years and have actually increased since the venture capital
peak in 2000. According to data from Thomson Venture Economics and the NVCA, the
median valuation of venture-backed Life Sciences companies rose from $17.7 million in
1998, to $32.5 million in 2002, an increase of 80%.
In contrast, median valuations of companies in all other industries fell from $20.3 million
in 1998 to $18.4 million in 2002, a decline of 10%. Further, valuations fluctuated widely
during the five years period, topping out at $39.5 million in 2000 and declining rapidly
thereafter.
According to Jesse Reyes, vice president at Thomson Venture Economics, “The
‘valuation inflation’ that afflicted many Internet-related companies during the boom had
only a marginal effect on Life Sciences companies. More realistic valuations in Life
Sciences, especially in the early stages of a company’s development means that follow-
on financing is easier to obtain. The difficulties of down-rounds are largely avoided.”
Realistic valuations also contribute to a company’s IPO potential. The public market,
though weak, accepted seven Life Sciences companies in 2002, or 32% of all venture-
backed IPOs last year. That figures compares to 9 Life Sciences companies in 1998, or
12% of all venture-backed IPOs.
First Round Financings Still Strong
Life Sciences companies getting venture backing for the first time accounted for 21% of
all first-time financings in 2002, up from 12% in 1998. The number of first-time Life
Sciences companies did decline from 221 in 1998 to 158 in 2002, a decrease of 29%.
However, first-time companies in all other industries fell 62% from 1,585 to 598 during
the same period. The figures indicate that venture capital firms continue to fill the
pipeline with new companies at a relatively strong pace.
Likewise, figures on follow-on financings show that venture capitalists are continuing to
supply growth capital to existing companies in their portfolios. In 2002, 347 Life
Sciences companies received $3.7 billion in additional financing, compared to 383
companies and $2.1 billion in 1998.

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Note to the Editor
When referencing information included in this release or other venture capital investment
information produced by the three MoneyTree Alliance partners, the information should
be first cited in one of the following ways: 1) The MoneyTree Survey from
PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital
Association, or 2) PricewaterhouseCoopers/Thomson Venture Economics/National
Venture Capital Association MoneyTree Survey. After the first reference, subsequent
references may refer to PwC/TVE/NVCA MoneyTree Survey, PwC/TVE/NVCA or
MoneyTree Survey. Charts and tables displaying the data are sourced to
PricewaterhouseCoopers/Thomson Venture Economics/National Venture Capital
Association MoneyTree™ Survey. After the first reference, subsequent references may
refer to PwC/TVE/NVCA MoneyTree Survey, PwC/TVE/NVCA or MoneyTree Survey.
About the PricewaterhouseCoopers/Thomson Venture Economics/National Venture
Capital Association Money Tree Survey
The MoneyTree™ Survey measures cash-for-equity investments by the professional
venture capital community in private emerging companies in the U.S. The survey
includes the investment activity of professional venture capital firms with or without a
US office, SBICs, venture arms of corporations, institutions, investment banks and
similar entities whose primary activity is financial investing. Where there are other
participants such as angels, corporations, and governments in a qualified and verified
financing round the entire amount of the round is included. Qualifying transactions
include cash investments by these entities either directly or by participation in various
forms of private placement. All recipient companies are private, and may have been
newly-created or spun-out of existing companies.
The survey excludes debt, buyouts, recapitalizations, secondary purchases, IPOs,
investments in public companies such as PIPES (private investments in public entities),
investments for which the proceeds are primarily intended for acquisition such as roll-
ups, change of ownership, and other forms of private equity that do not involve cash such
as services-in-kind and venture leasing.
Investee companies must be domiciled in one of the 50 US states or DC even if
substantial portions of their activities are outside the United States.
Data is primarily obtained from a quarterly survey of venture capital practitioners.
Information is augmented by other research techniques including other public and private
sources. All data is subject to verification with the venture capital firms and/or the
investee companies. Only professional independent venture capital firms, institutional
venture capital groups, and recognized corporate venture capital groups are included in
venture capital industry rankings.
MoneyTree Survey results are available online at www.pwcmoneytree.com,
www.ventureeconomics.com, and www.nvca.org.

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The National Venture Capital Association (NVCA) represents over 450 venture capital
and private equity organizations. NVCA's mission is to foster the understanding of the
importance of venture capital to the vitality of the U.S. and global economies, to
stimulate the flow of equity capital to emerging growth companies by representing the
public policy interests of the venture capital and private equity communities at all levels
of government, to maintain high professional standards, facilitate networking
opportunities and to provide research data and professional development for its members.
For more information visit www.nvca.org.
The PricewaterhouseCoopers Private Equity & Venture Capital Practice is part of
the Global Technology Industry Group, www.pwcglobaltech.com. The group is
comprised of industry professionals who deliver a broad spectrum of services to meet the
needs of fast-growth technology start-ups and agile, global giants in key industry
segments: Networking & Computers, Software & Internet, Semiconductors, Life
Sciences and Private Equity & Venture Capital. PricewaterhouseCoopers is a recognized
leader in each industry segment with services for technology clients in all stages of
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in 142 countries, we build relationships by providing services based on quality and
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information provider for equity professionals worldwide. Venture Economics offers an
unparalleled range of products from directories to conferences, journals, newsletters,
research reports, and the Venture Expert™ database. For over 40 years, Venture
Economics has been tracking the venture capital and buyouts industry. Since 1961, it has
been a recognized source for comprehensive analysis of investment activity and
performance of the private equity industry. Venture Economics maintains long-standing
relationships within the private equity investment community, in-depth industry
knowledge, and proprietary research techniques. Private equity managers and
institutional investors alike consider Venture Economics information to be the industry
standard. For more information about Venture Economics, please visit
www.ventureeconomics.com.